John Gregory is poised to make a surprise return to football as the new manager of Hungary. The 51-year-old has held talks with the Hungarian Football Association on two separate occasions about taking over from Lothar Matthäus and is expected to be confirmed as the German's successor later this month, paving the way for him to take charge of a friendly against England in May.

Gregory's name has been strongly linked with Queens Park Rangers though the Hungarian FA is ready to offer the former Aston Villa and Derby County manager a two-year contract that will run up to the 2008 European Championships, as soon as Istvan Kisteleki is appointed as their new president on February 24. The financial terms of the deal are understood to be suitable, granting Gregory the opportunity to resume football management after a his three-year hiatus.

Although Gregory has yet to accept the position, sources in Hungary claim that his agreement is regarded as a formality. He first met officials of the Hungarian FA in October when he travelled to Budapest for a World Cup qualifier against Croatia and further discussions were recently held with two members of its board in London. It is understood that the talks were positive and that Gregory is the only name in the frame for the vacancy.

"I have been across to meet them and they have been across to meet me," Gregory said yesterday. "Both parties get on with each other. We have discussed the details of what the job would entail and so it's up to both parties to have further talks over the next week or so and find out how far we want to take it."

Should Gregory take over there is a strong possibility that his first match will be against England on May 30. The friendly is scheduled for Wembley and if the building work is finished by then he will have the honour of walking a team out for the first international to be staged at the ground, six years after he led Aston Villa out in the last FA Cup final to be held at the old national stadium.

Gregory's tenure as Aston Villa manager came to an end 20 months later leading to a brief spell as Derby manager before he was dismissed in 2003. He is, though, highly regarded in Hungary and is seen as a natural replacement for Matthäus, who failed to secure qualification for this year's World Cup finals in Germany.

The former German international did not have his contract renewed when it expired at the end of December after Imre Bozuky, the former president, was forced to stand down when the board of the Hungarian FA dissolved after a spate of resignations.

The Hungarian FA has been in a state of flux since, though Kisteleki, who has been charged with overseeing the temporary committee set-up in the interim period, is expected to restore stability when he assumes Bozuky's duties in 10 days' time. Kisteleki's expected election will also coincide with the appointment of a new board. Once those formal proceedings are finalised the Hungarian FA plans to move swiftly to announce that Gregory will become the national team coach.